Accurate monitoring of leakage losses in water supply pipeline network is crucial for preventing water resource waste. This study proposes a multi-criteria decision analysis method to optimize sensor arrangement for monitoring the pipeline leakage loss. To address uncertainties in weights, difference thresholds, and preference thresholds in sensor arrangement, we used information entropy to screen initial sensor positions within the decision space. Based on monitoring objectives, we defined criteria for sensor arrangement optimization and applied the multi-criteria decision analysis method to rank the initial schemes. Taking into account multiple sets of parameters and different preference scenarios, we obtained the probabilistic ranking of the schemes. To validate the proposed method, we conducted simulation experiments using the k1 model of the baseline test pipe network and compared several preference scenarios. The results demonstrate that the proposed method effectively handles sequential priorities, rankings, and pairwise comparisons, avoiding the use of “black box” in selecting sensor placement scenarios.